Introduction

Does your monthly salary give you the impression that your expenses are higher and your profits are lower? Do you want to make more money or save more money? Is your current way of life and loan obligation too much for you to bear? These thoughts can irritate you. Furthermore, if few assets provide security, it can shake you from within. If this is the situation for you, you may consider saving money and putting money in a savings account.

However, before you can begin saving money, you must first pay taxes on your taxable income. Nobody in our world enjoys paying taxes, and when you have taxable income in your kitty, it is always wise to pay it because it is a good deed. 

However, you can reduce your tax burden by planning ahead of time from the start of the fiscal year. Income tax regulations in India have exempted certain costs and investments from taxes. If you make certain investments, such as buying life insurance, you can incur certain expenses and thus be eligible for a tax deduction and exemption. It’s not a secret sauce; it is self-evident that life insurance coverage offers numerous advantages.

Types of Life Insurance

Life insurance is like a library that caters to the needs of every person based on their requirements. Therefore, it consists of many insurance policies to buy in the Indian market. Here are some examples of life insurance policies in India:

1. Savings Plans: This life insurance plan with a savings component attached to it is commonly known as Endowment Plans. As you move towards the plan’s conclusion, it helps you not only in having life coverage but also helps build a corpus of wealth for the future that you receive as maturity amount at the end of the life insurance policy. 
2. Term Insurance: This is a pure life insurance policy intended to give you life coverage at a meager cost. These plans are relatively popular due to having such low prices. These policies are generally used as tax-saving plans as well. 
3. Retirement Plans: If someone in their 40s starts thinking about their post-employment phase, then a retirement plan is the answer. It is designed to provide financial aid once your era of active earning ceases and it’s time to rest and enjoy your hard-earned money. It assists in weaving a sizable retirement corpus over time for a stress-free retirement. 
4. Health Plans: Want to have assistance when met with medical emergencies? Health insurance is the ultimate hero as it saves your savings and pays the medical bills. 
5. Child Plans: This kind of life insurance guarantees a financially fruitful future for your child in achieving significant milestones in life such as education and marriage. But, it works the best when bought at the right time and with ample coverage. 
6. ULIP Plans: It is a balanced blend of investment and life insurance that allows you to equally divide your money, invest some in investment tools, and keep the rest for insurance. They come with market-associated risk, so one should be ready to expect the unexpected. 

With so many life insurance plans accessible to you, we will focus on the term insurance plan in this post. If you are your family’s breadwinner, a dependable term insurance policy will provide much-needed financial protection to your dependents in your absence. 

Meanwhile, there is another reason why term insurance should be part of every investment strategy. Aside from providing financial stability and genuine delight, term insurance can also help you drastically reduce your tax burden. As a result, it is one clear plan to include in your financial planning. 

What is Term Insurance

Term insurance offers comprehensive coverage for a defined period as long as the policyholder pays the required premium. In the insured’s untimely death, the term insurance policy provides financial stability to dependents who are direct beneficiaries.

This plan provides the policyholder’s family financial stability and tax advantages to the insured. Section 80D allows you to deduct the premiums you pay for a term insurance plan.

While whole life and term insurance prices are typically fixed from the start, the pricing for these other options is frequently flexible, based on the performance of your cash-value account and the type of protection you choose.

Critical Features Of Term Insurance Policy

• Lower Premiums
• Death benefits
• Tax benefits
• Rider/Add-on covers at a pocket-friendly price
• Protection against various liabilities 

Remember that a term life insurance policy does not provide a maturity benefit. It means that if you cancel the insurance before completing the term, you will receive no benefits. Thus, it is known as pure life insurance, which provides protection just in the unexpected event of death. 

The best thing is that insurance companies charge low premiums for term plans. The premiums for this type of insurance are among the lowest of any life insurance plan. The total cash is used to cover risks and is not utilized for subsequent investment.

Term Insurance Tax Benefits

There are various clauses in the Income Tax Act of 1961 that allow us to acquire term insurance tax benefits to encourage individuals to get term insurance to safeguard their dependents financially. These deductions significantly reduce your tax burden, allowing you to pay the least amount of tax each year your term plan is active. Term insurance also comes with tax benefits that one can enjoy, and they are as follows:

Tax-saving benefits under Section 80C

• Under this tax law, an individual can claim a tax exemption of up to 1.5 lakh for term insurance premiums in a fiscal year. 
• Premiums paid for themselves, spouse, and children? Then you can avail of the benefit. 
• One condition that must be noted by the life insured is if the annual premium payment does not breach 10% of the sum guaranteed, it’s a head-up for the deduction. 
• If the life insured surrenders or cancels the policy before the two years from the commencement date, then no tax advantages would be available. 

Tax-saving benefits under Section 10(10D)

• When the life insured dies (when the term plan is active), the amount that dependents will receive from your term insurance policy will be tax-free.
• If you invest in term insurance that offers the money-back option, the sum paid at maturity is likewise tax-free under Section 10(10D).
• Such term insurance tax benefits apply to both the primary insurance policy and any extra riders purchased to supplement your insurance coverage.

Best Term Insurance Plans In India

We provide our audience with the best, and some of India’s best term life insurance plans are listed below. You can consider any of these plans for your financial budgeting. 

1. ABSLI DigiShield Plan

ABSLI DigiShield Plan provides a way to safeguard multiple needs with a single plan. It is a comprehensive plan with ten options to pick from based on your needs.

Features:

• ABSLI DigiShield Plan provides ten plan alternatives to meet your specific protection needs.
• Individuals are covered under the term plan for one year or until they reach the age of 100.
• The death benefits are adjustable and can be paid out monthly installments, lump sums, or both.
• On reaching the age of 60, you have the option of receiving a survival benefit as a monthly income.
• The minimum entering age is 18 years old, while the maximum maturity age is 85.

2. ABSLI LifeShield Plan

ABSLI Life Shield Plan provides you with various coverage alternatives from which to pick. You do not have to sacrifice your family’s requirements when there is an easier way to safeguard your life.

Features:

• It has 8 plan options from which to get the best coverage.
• The plan allows you to include your spouse in your coverage.
• The Return of Premium Option is included with the term plan.
• The LifeShield Plan includes terminal illness coverage.
• You can buy it when you hit adulthood, and the maximum maturity age is 85 years. 

3. HDFC Life Click 2 Protect Life.

HDFC Life offers you a term plan that allows your family to save for life’s uncertainties.

Features:

• It provides you with the opportunity to receive income payments beginning at 60.
• You have the option of changing the premium payment terms from regular pay to limited pay.
• The company allows you to supplement your coverage with Critical Illness Plus Rider, Accident Disability Rider, and others.
• This plan offers three options: Life Protect Option, Life and CI Rebalance Option, and Income Plus Option.
• 18 years is the minimum required age to avail of this plan, and the maximum maturity age is 85.

Conclusion

If you haven’t yet purchased a term insurance policy, this is just more reason to do so! Term plans’ various properties make them a valuable financial tool in practically every situation. 

So, invest in a term insurance policy as soon as possible. However, choose a plan with low premiums, a substantial sum assured, and the possibility of adding riders for further protection.